How recent Sars changes affect South Africans living abroad

South Africans living and working abroad are being urged to take note of recent changes by the South African Revenue Service (Sars) that significantly alter how non-residency for tax purposes is treated and enforced.

According to Thomas Lobban, Director of Tax and Legal at Latita Africa, Sars has quietly amended its Notice of Non-Resident Tax Status to now include the specific legal basis - such as reliance on a double tax agreement  - for ceasing South African tax residency. While the change appears administrative, Lobban says it marks a crucial shift in Sars’ oversight of taxpayers living outside the country.

Coupled with the 2025 requirement for taxpayers to declare their residency status to Sars, this change dramatically increases the risk of residency audits and backdated reclassification, especially for South Africans living abroad or those returning after a period of non-residency.

Sars is reviewing and tightening up its protocols around how it treats non-residency from a tax perspective,” Lobban said in an interview.

Legal Basis for Non-Residency Now Explicit

Previously, individuals who ceased to be South African tax residents would receive a notice from Sars confirming their non-resident status. Lobban said what is new that recently, Sars has started including in those letters the reason why you are a non-resident.

South Africa has two tests to determine tax residency. The first is the “ordinarily resident” test, which looks at whether South Africa is your permanent home. If your intention is not for South Africa to be your permanent home then you can cease your tax residency on that basis. Sars now includes that reason in the letter.

But if you have every intention for South Africa to remain your permanent home, and you’re only abroad temporarily you can then apply a double tax agreement  to say that you’re only resident in the other country, and therefore non-resident in South Africa. Sars then states that as the basis on which you ceased to be a tax resident.

Lobban said the other change Sars made is that people returning to South Africa are now required to declare to Sars that they have resumed their South African tax residency.

"Previously, you wouldn't need to do that - you could simply go onto eFiling, change your status, and that was it. You’d be a resident again. But now, it's a formal disclosure. You need to declare to Sars when you became a tax resident again," he said.

He said a lot of people over the years have left South Africa and done nothing about their tax residency. They stayed under the radar and then returned to South Africa and quietly begin treating their tax affairs as normal again, from Sars perspective.

But now, since you must declare when you became a tax resident again, Sars potentially has the opportunity to go back and say, “Aha, you never actually ceased to be a tax resident. You owe us tax on that foreign income from the past,” Lobban explained.

The new declaration gives Sars the opportunity to review the taxpayers intentions. They can examine the circumstances around their return and decide whether they believe the previous non-resident status was bona fide  creating the risk of owing historic taxes.

"Sars is now tightening that up and creating another area of potential audit from a tax residency perspective," he said.

Lobban said if you look at stats over the past few years, you’ll notice that South Africa has a high rate of tax emigration - people ceasing to be tax residents, leaving the South African tax net.

Since at least 2017, Sars has increasingly been focusing on foreign-sourced income earned by South Africans as an additional revenue stream. For example, the unlimited expat tax exemption was changed in March 2020 to be limited to R1.25 million per year—and that threshold has never been raised since.

Lobban said a lot of South Africans leave, earn foreign income, and neither disclose it to Sars nor formally cease tax residency.

"Sars is evidently now looking at these areas to collect revenue it believes is due. For taxpayers they catch out, those individuals will likely have to make their arguments retrospectively - which, at that point, come across more like excuses. That puts Sars in a very powerful position, especially in a year where it’s critical for them to collect more revenue to address the shortfall from the last Budget," he said. 

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